Share-based Compensation (Tables)

3 Months Ended

Oct. 31, 2013

Share-Based Compensation Expenses for Continuing Operations

The following table presents share-based compensation expense included in our condensed consolidated statements of operations:

	For the Three Months Ended October 31
(in millions)	2013			2012
Cost of product sales	$	0.2		$	0.2
Cost of engineering sales		0.1			0.4
Research and product development		0.6			0.3
Selling and marketing		0.3			0.3
General and administrative		1.5			1.4
Total share-based compensation expense before tax		2.7			2.6
Income tax effect		(0.9	)		(0.8	)
Share-based compensation expense included in net (loss) income	$	1.8		$	1.8

Compensation Expense Recognized on Awards

The following table summarizes share-based compensation expense associated with each of our share-based compensation programs:

	For the Three Months Ended October 31
(in millions)	2013			2012
Peformance-based EPS related condition compensation expense	$	0.5		$	1.1
Performance-based TSR related condition compensation expense		0.6			0.7
Total performance-based stock compensation expense		1.1			1.8
Time-based stock options and restricted stock		1.6			0.8
Total share-based compensation expense before tax		2.7			2.6
Income tax effect		(0.9	)		(0.8	)
Total share-based compensation included in net (loss) income	$	1.8		$	1.8

Fair Value of Option Grant Assumptions

The fair value of each option grant was estimated on the grant date using the Black-Scholes valuation model with the following assumptions:

	For the Three Months Ended
	October 31
	2013			2012
Expected option term (1)		5.37 years			5.42 years
Expected volatility (2)		38.6	%		41.0	%
Risk-free interest rate (3)		1.77	%		0.78	%
Expected annual dividend yield (4)		0.52	%		0.57	%
Weighted average grant date fair value	$	27.54		$	24.77

(1) The expected option term factor was estimated using historical data.

(2) The expected volatility factor for each grant is determined based on the review of the average of historical daily price changes of our common stock over the most recent expected option term.

(3) The risk free interest rate for periods equal to the expected term of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant.

(4) The expected annual dividend yield is calculated by dividing the expected annual dividends by the stock price on the date of grant.

Fair Value of Awards Grant Assumptions

The fair value of the restricted stock units with a TSR-related condition at date of grant was estimated using the Monte-Carlo simulation model with the following assumptions:

	For the Three Months Ended October 31
	2013			2012
Stock Price (1)	$	77.08		$	70.04
Expected volatility (2)		27.6	%		28.0	%
Risk-free interest rate (3)		0.82	%		0.32	%
Expected annual dividend yield (4)		0.00	%		0.00	%

(1) The stock price is the closing price of our common stock on the date of grant.

(2) The expected volatility factor for each grant is determined based on the historical volatility for the peer group companies and our common stock over a period equal to the remaining term of the performance period from the date of grant for all awards.

(3) The risk free interest rate for periods equal to the performance period is based on the U.S. Treasury yield curve in effect at the time of grant.

(4) Dividends are considered reinvested when calculating TSR. For the purpose of the fair value model, the dividend yield is therefore considered to be 0%.